Equifax breach could wreak havoc on mortgage borrowers

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The FHA 203k loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings.

The data breach revealed by Equifax last week – hackers stole the personal information of 143 million consumers from the credit reporting agency – is one of the largest in history. And for people trying to get a mortgage, it could potentially be one of the most damaging.

The breach could affect more than half the adult population of the United States, according to a report by . The hackers who stole the information – which included Social Security numbers and even, in hundreds of thousands of cases, credit card numbers – could use that information to run up debt in other people’s names.

Worry is a reasonable reaction. An identity thief running up debts in a consumer’s name could drive that consumer’s debt-to-income ratio into the stratosphere, according to Realtor.com. And that could mean a consumer who’s had perfect credit all her life would suddenly find herself unable to qualify for a mortgage.

Douglas also predicted that there would be a spike in fraudulent mortgage and refinance applications in the wake of the breach. That means originators might have to ramp up their vetting procedures – which in turn could increase the time and cost of the mortgage process.

“It’s not a breach where they just got a Social Security number or another breach where they just got a credit card number,” Douglas told Realtor.com. “Here, they got the whole enchilada. This is now a danger for a lifetime.”